This paper aims to discuss the compliance duties of Swiss banks toward the Chinese exchange control in case of PRC residents’ deposits.
The paper matches the Swiss regulatory framework and practice in matter of banks diligence with that of the PRC exchange control and tentatively identifies the consequences resulting thereof for Swiss banks.
The paper finds that exchange control does fall within the scope of the Diligence Code. It suggests that banks should broadly interpret the related provisions. While in case of infringement, Chinese penalties can still be rated as a remote and moderate threat, they might strengthen. Meanwhile, the Swiss ones, under the Code, are serious.
The paper does not cover other forms of overseas investment from China, namely, commercial investment. Besides, there is no related jurisprudence or practice as of yet; therefore, the findings of the paper need to be tested.
The paper suggests that the compliance officers of Swiss banks should familiarize themselves with the specificities of the PRC exchange control to anticipate the related risks.
Sino-Swiss compliance and bilateral assistance in financial matters are still unchartered waters. Because the Greater China market is of growing significance for Swiss banks, they might welcome early guidance to avoid repeating their mistakes with the USA and the EU.
Liebeskind, J. (2019), "The PRC exchange control-related compliance duties of Swiss banks towards PRC residents’ deposits", Journal of Money Laundering Control, Vol. 22 No. 1, pp. 62-75. https://doi.org/10.1108/JMLC-11-2017-0064Download as .RIS
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